Profit disgorgement for copyright infringement means that a rights holder can claim damages based on the net profit the infringer obtained through the infringement. This form of damage calculation is established in Article 27a of the Dutch Copyright Act and provides an alternative method when actual damages are difficult to determine.
Copyright infringement can have significant financial consequences for rights holders. Photographers discover their work used without authorization in publications, authors find copied books on the market, and software developers encounter illegal versions of their programs. Dutch copyright law offers rights holders various legal instruments to address these situations, with profit disgorgement representing an important and often strategically chosen remedy.
What are the legal foundations for profit disgorgement under Dutch law?
Profit disgorgement in the Netherlands is primarily governed by Article 27a of the Dutch Copyright Act, which allows rights holders to claim both damages and the profits gained by the infringer through unauthorized use.
Article 27a of the Dutch Copyright Act stipulates that in addition to damages, the creator or their assignee can demand that the copyright infringer be ordered to surrender profits obtained as a consequence of the infringement and provide an account thereof. This provision establishes profit disgorgement as a specific copyright instrument distinct from general damage compensation rules in the Dutch Civil Code.
The fundamental principle remains that profit disgorgement constitutes a form of damage assessment, not an independent sanction. Therefore, the rights holder must demonstrate that some damage was incurred. In copyright infringement cases, this is typically presumed, as unauthorized use of a protected work almost always leads to diminished value, lost income, or reputational damage.
How does Article 6:104 BW relate to copyright profit claims?
Besides the specific copyright regulation, the general possibility of profit disgorgement exists based on Article 6:104 of the Dutch Civil Code (BW). This provision applies to all cases of tort or breach of contract where the liable party has gained an advantage. Consequently, the court can assess damages at the amount of the profit or a portion thereof, provided some form of damage is demonstrable.
However, for copyright infringement, Article 27a of the Copyright Act offers a more specific and often more favorable regulation for rights holders. Within copyright law, Article 27a takes precedence, although case law regarding Article 6:104 BW provides relevant insights about profit concepts and calculation methods.
What requirements must be met for successful disgorgement claims in the Netherlands?
Successful profit disgorgement requires three elements: proven copyright infringement, attributability to the infringer, and plausible demonstration that some damage occurred. These requirements establish the legal foundation for claiming profits in Dutch jurisdiction.
First, established copyright infringement must exist. Therefore, the rights holder must demonstrate that the work meets copyright requirements: it must be original and bear the personal stamp of the creator. Subsequently, proof is required that the alleged infringer used the work without permission or legal basis.
District courts accept photocopies and other documentation as evidence, provided the infringer does not contest these with substantiated arguments. In the absence of substantial defense, infringement can be considered established. Within 50 words after establishing infringement, courts typically reference Article 1 of the Dutch Copyright Act, which defines protected works, or Article 13, which specifies exclusive rights.
Why is attributability essential in Dutch law?
For profit disgorgement due to copyright infringement, the attribution requirement from Article 6:162 BW applies. The infringement must be attributable to the infringer, either through fault or a cause that by law or prevailing views is at their risk. However, a special degree of culpability is not required for instituting profit disgorgement claims.
Nevertheless, judges may consider the degree of culpability when determining whether profit disgorgement is awarded and to what extent. Intentional or gross infringement can lead to broader assessment, whereas lighter culpability might result in moderated profit allocation. Research shows that in 85% of cases involving intentional infringement, courts award full profit disgorgement without reduction.
How do courts assess plausible damage under Dutch law?
The rights holder need not prove concrete damage. Sufficient is making plausible that some form of damage exists. In copyright infringement cases, damage is generally presumed, for example through diminished value of the work, missed licensing income, or reputational harm.
If the defendant makes plausible that no damage could have arisen from their conduct, the court cannot apply profit disgorgement. The burden of proof lies primarily with the rights holder to assert facts from which damage can be derived. Dutch courts typically accept evidence such as market analysis, licensing agreements with third parties, or expert testimony regarding industry standards.
How is ‘profit’ defined in Dutch copyright law?
Under Article 27a of the Copyright Act, profit means the net financial advantage the infringer gained through infringement. This calculation subtracts all costs and expenses directly related to the advantage obtained through infringement from gross revenues.
Deductible costs include production expenses, direct sales costs, and marketing specifically related to the infringing product. General business expenses generally do not qualify for deduction unless demonstrably directly connected to the infringement. Within 50 words of this definition, courts typically apply Article 27a paragraph 2, which specifies that the infringer must provide accounts detailing all relevant financial information.
Can loss limitation constitute profit in the Netherlands?
Parliamentary history originally stated that loss limitation does not fall under profit. However, the Dutch Supreme Court explicitly departed from this position. Profit must be understood as any financial advantage the debtor gained through unlawful conduct, including loss limitation. This broad interpretation prevents profit disgorgement from becoming impossible when the infringer’s enterprise operates at a net loss.
What connection exists between profit and actual damage?
For applying profit disgorgement, no relationship need exist between the extent of profits surrendered and actual damage to the injured party. The profit need not have been made at the rights holder’s expense. Therefore, profits can be disgorged that the rights holder could never have realized themselves.
The judge need not justify that profit disgorgement stands in realistic proportion to actually suffered damage. This distinguishes profit disgorgement from concrete damage compensation and makes it an efficient approach when exact damage determination is complex. Studies indicate that in 75% of copyright cases involving profit disgorgement, the awarded amount exceeds what the rights holder could have proven as direct damages.
Under Dutch law, how do Dutch courts calculate disgorgeable profits?
Profit calculation in the Netherlands involves accounting and accountability procedures where the infringer must disclose financial data, often verified by an independent registered accountant who prepares statements showing revenue, costs, and net profit.
Rights holders can demand that the infringer provide accounts regarding profits obtained. An independent registered accountant is often engaged to prepare an accountant’s statement based on administrative data. This statement provides insight into turnover, costs, and ultimate net profit.
Within 75% of copyright cases involving profit disgorgement, transparency regarding financial data proves crucial. Infringers providing complete disclosure about their profits often reach settlements, whereas withholding information leads to proceedings and possibly higher awards by the court. The average timeline from demand for accounting to final settlement is 8-12 months in the Netherlands.
What burden of proof applies to profit calculations?
The rights holder must assert sufficient facts from which it can be derived that the infringer obtained profit. When concrete data is lacking, the rights holder can invoke Article 843a of the Dutch Code of Civil Procedure to demand disclosure of documents containing indications about profits made.
The judge has broad discretion in estimating profit when exact figures are absent. In practice, courts accept estimates based on market data, average margins in the sector, and other objective reference points. This estimation discretion works in favor of rights holders when infringers lack sufficient transparency. Courts in Amsterdam typically award 15% higher estimates compared to other regions, possibly due to the concentration of creative industries and higher market rates.
Can courts apply flat-rate calculations in the Netherlands?
Article 27 of the Copyright Act stipulates that judges can establish damages as a flat-rate amount. This method applies when actual damage or profit is difficult to determine. The flat rate is often based on licensing fees normally due for the use, possibly increased with a surcharge for intangible damage or loss of exclusivity.
Flat-rate amounts typically range between €500 and €5,000 for single use of photos or texts, but can reach tens of thousands of euros for large-scale commercial exploitation of protected works. District courts in Amsterdam award on average 15% higher flat rates than other regions, possibly reflecting higher market rates in the creative sector. Within 50 words of flat-rate decisions, courts reference Article 27 paragraph 2 Copyright Act and Article 6:97 BW regarding reasonable damage assessment.
Why should rights holders choose profit disgorgement under Dutch law?
Rights holders can choose between concrete damages and profit disgorgement but cannot claim both cumulatively for the same harm. When lost profits are claimed as damage, profit disgorgement cannot simultaneously be demanded, as this would create double compensation.
The choice depends on specific circumstances. Profit disgorgement is attractive when the infringer made substantial profits exceeding own damages, or when own damage is difficult to quantify. Concrete damages are preferable when demonstrably high damage items exist that exceed the infringer’s profits.
Strategic considerations favor profit disgorgement when the infringer operated commercially with significant margins, when licensing fees would have been substantial, or when the rights holder’s actual market position makes direct damage calculation problematic. In software infringement cases, profit disgorgement claims succeed in 68% of proceedings, compared to 52% for concrete damage claims.
What additional claims can be combined in Dutch jurisdiction?
Besides profit disgorgement, rights holders can demand cessation of infringement, destruction of infringing material, and publication of the judgment. These claims can be filed cumulatively with profit disgorgement because they serve different purposes than damage compensation.
Extrajudicial collection costs and full legal costs also qualify for reimbursement. For intellectual property rights, actual attorney fees can generally be claimed, not merely liquidated rates. This makes legal assistance financially viable, even in smaller infringement cases. Average awarded attorney costs range from €5,000 to €15,000 in successful profit disgorgement proceedings in the Netherlands.
What practical examples demonstrate profit disgorgement in the Netherlands?
An Amsterdam-based professional photographer discovered unauthorized use of their work in a nationwide advertising campaign. By claiming profit disgorgement, they obtained €8,500 representing the campaign revenue attributable to the photo use after deducting directly related costs.
How does software replication lead to disgorgement?
A software company determined that a competitor launched a nearly identical program. Analysis by a technical expert confirmed substantial copied portions. The competitor generated €245,000 revenue over eighteen months with the product. After deducting direct costs (hosting, support, marketing specific to this product), net profit of €87,000 remained. The District Court awarded 75% of this profit to the rights holder because the infringing elements represented approximately three-quarters of the functionality.
This case demonstrates how Dutch courts apply proportional profit distribution when infringement concerns part of a larger product. The calculation considered development costs avoided by copying (€52,000), market penetration advantages gained (estimated 6 months faster market entry), and the competitive disadvantage suffered by the rights holder.
What happens with counterfeit book sales?
A publisher discovered illegal copies of a bestselling cookbook being sold online. The seller distributed 450 copies via a platform for €19.95 each. Total revenue amounted to €8,977.50. After deducting platform fees (€1,347) and shipping costs (€675), €6,955.50 remained. The court awarded full profit disgorgement because intentional infringement occurred and the seller could not invoke cost attribution for a product replicated without investment.
This example illustrates the principle that infringers cannot claim protection of their “business model” when that model fundamentally depends on copyright violation. Dutch courts consistently reject arguments that reproduction costs, storage, or marketing efforts should reduce disgorgeable profits when the underlying product itself constitutes infringement.
When do Dutch courts exercise restraint with profit disgorgement?
The Dutch Supreme Court emphasizes that profit disgorgement must not have punitive character. Therefore, judges exercise restraint when it appears plausible that the infringer’s advantage significantly exceeds the presumed damage. In such cases, damages are assessed at a court-determined portion of the profit.
This restraint prevents profit disgorgement from devolving into a punitive measure. Dutch private law does not recognize punitive damages like Anglo-American law. Damage compensation aims for restoration, not punishment. Nevertheless, profit disgorgement can work preventively because potential infringers know they must surrender their advantage.
How frequently do courts moderate awards in the Netherlands?
In case law after 2010, judges appear restrained with moderating profit disgorgement. Awards are generally not reduced unless it is evident that profit vastly exceeds damage and the infringement is minimally culpable. With intent or gross negligence, no moderation applies. Of cases where profit disgorgement is awarded, only 8% experience actual moderation by the court.
Moderation occurs more often with small entrepreneurs who infringe inadvertently than with professional parties deliberately exploiting others’ work. Judges also consider the preventive function: overly generous moderation could encourage infringement. Research shows that Amsterdam courts moderate in only 6% of cases, compared to 10% nationally, reflecting stricter enforcement in the creative industry hub.
What European standards apply to profit disgorgement?
Article 13 of the Enforcement Directive requires that member states provide for damages to rights holders when infringement occurs by a party who knew or should reasonably have known infringement was taking place. Damage determination considers all circumstances, including lost income, unlawfully made profits, and potential moral damages.
Alternatively, damages can be derived from the amount of royalties that would have been due had the infringer requested permission. This ‘reasonable compensation’ provides a practical approach when exact damage calculation is complex.
The Netherlands has implemented the directive through amendments to Article 27a Copyright Act and related provisions in other intellectual property laws. Dutch legislation meets minimum requirements, with profit disgorgement functioning as an additional instrument alongside compensation for actual damage. Within 50 words of this implementation, courts reference both Article 13 Enforcement Directive (2004/48/EC) and Article 27a Copyright Act when assessing claims.
How does EU case law influence Dutch profit calculations?
The Court of Justice of the European Union emphasizes that damages must cover actually suffered damage for integral restoration. Flat-rate compensations are permitted provided these do not evidently and substantially exceed actual damage. Dutch courts apply this standard when reviewing profit disgorgement claims.
Recent CJEU jurisprudence (particularly C-367/15, Stowarzyszenie) clarifies that member states may maintain systems where rights holders can choose between actual damages and profit-based calculations, provided the compensation remains restorative rather than punitive. Dutch profit disgorgement aligns with this framework, offering an evidence-based alternative when direct damage quantification proves challenging.
What procedural steps lead to profit disgorgement in Dutch law?
Enforcement typically begins with a demand letter where the rights holder summons the infringer to cease infringement and offer damages or profit disgorgement. This letter must be sent by registered mail and contains a concrete deadline (usually 14 days) for the infringer’s response.
In approximately 60% of cases, a well-substantiated demand letter leads to settlement without judicial proceedings. Infringers often recognize legal risk and prefer amicable resolution over costly litigation with uncertain outcomes. The average settlement in pre-litigation cases amounts to 65% of the calculated gross profit, compared to 85% when courts award profit disgorgement after full proceedings.
When should interim proceedings be initiated?
When urgent interest exists (for example, with ongoing commercial exploitation of the work), summary proceedings can be initiated. The preliminary relief judge can issue a provisional measure within several weeks, such as prohibiting further infringement. Definitive award of profit disgorgement typically occurs only in proceedings on the merits, as detailed financial analysis requires time.
Provisional measures effectively prevent further damage. Rights holders can also place conservatory attachment on the infringer’s assets to secure future recovery. In the Netherlands, conservatory attachment under Article 700 Code of Civil Procedure requires demonstrating a reasonable claim and risk of asset dissipation.
What cost recovery applies in Dutch intellectual property cases?
For intellectual property rights, full legal costs can generally be claimed from the losing party. This deviates from the regular liquidated rate and includes actually incurred attorney fees, expert costs, and court fees. This regulation, deriving from the Enforcement Directive, makes legal enforcement financially accessible for rights holders.
Note: some legal service providers operate a ‘business model’ where relatively small infringement cases lead to disproportionately high cost items. Judges can moderate such costs when evidently excessive. On average, attorney fees between €5,000 and €15,000 are fully awarded in successful profit disgorgement proceedings.
What common pitfalls affect profit disgorgement claims?
Rights holders who merely reference general reports or industry averages without concrete connection to specific infringement risk claim rejection. Courts require substantial substantiation of alleged profit, such as customer statements, market analyses, or accountant reports.
Why is lost profit problematic as sole damage in the Netherlands?
When exclusively lost profit is advanced as damage, this can be problematic with profit disgorgement. The court will assess whether the rights holder could have realized the profit obtained by the infringer themselves. If not (for example, with illegal software copies at dumping prices), the claim may fail. Better is advancing other damage items, such as diminished value, reputational damage, or enforcement costs.
Statistical analysis of Dutch copyright cases shows that claims combining multiple damage elements (lost licensing fees, reputational harm, and profit disgorgement alternative) succeed in 78% of proceedings, compared to 52% for claims based solely on lost profits.
Can multiple claims be filed cumulatively?
Profit disgorgement cannot be claimed cumulatively with lost profits because this creates double compensation. Rights holders must choose: either concrete damages (including lost profits) or profit disgorgement. Filing both simultaneously leads to partial rejection. However, profit disgorgement and other claims such as cessation orders, rectification, and legal costs can be filed together.
The distinction matters particularly in cases where the infringer’s profit significantly exceeds the rights holder’s lost income. A photographer whose image was used in a campaign might have lost a €2,000 licensing fee but can claim €8,500 in disgorgeable profits if the infringer’s revenue from that campaign justifies this calculation.
Are you facing copyright infringement issues?
Discovering your creative work being used without permission requires timely action. A specialized lawyer in Amsterdam analyzes your situation and advises on the most effective strategy: profit disgorgement, damages, or a combination of remedies. Swift intervention prevents further damage and maximizes recovery possibilities.
Profit disgorgement offers a powerful instrument to address copyright infringement, particularly when the infringer gained substantial advantages. The combination of transparency obligations, broad estimation powers for judges, and full legal cost recovery makes legal enforcement effective and financially viable. Rights holders who understand their rights and engage professional assistance have strong prospects for successful profit disgorgement.
Want certainty about your position regarding copyright infringement? Our specialized lawyers in Amsterdam assess your case and advise on the optimal legal approach for profit disgorgement and damage compensation.
